Sri Lanka’s financial literacy improved by 23% in 2021

Sri Lanka’s financial literacy in 2021 stood at 57.9 per cent, a 23 per cent improvement from the previous 35 per cent as reported by the then Global Financial Literacy Survey in 2014.

Out of the 57.9 per cent financially literate adults, 61.1 per cent are males and 55.2 per cent are females with a gender gap of 5.9 per cent.

These findings were outlined in the Financial Literacy Survey Sri Lanka 2021 led by the Central Bank of Sri Lanka with the technical and financial assistance of the International Finance Corporation, a member of the World Bank Group.

Financial literacy was calculated focusing on four fundamental concepts for financial decision making; numeracy, compound interest rate, inflation and risk diversification. The concepts of numeracy and compound interest rate were most frequently understood by the participants while half of the population understood the concept of inflation and only 33 per cent correctly answered the question on risk diversification.

The survey also revealed the respondents' attitudes towards digital payment methods. More than half of the Sri Lankans have positive attitudes towards the safety and efficiency of digital payment methods.

Further, the survey exposed that young adults in Sri Lanka are more financially literate than the elderly population. It’s a positive move as it reveals that the population might be more financially resilient in the future. In addition, people who use digital financial devices or services exhibit significantly higher financial literacy levels, which is quite similar to the survey outcomes of other countries. This also indicates the need to ensure equitable access to digital literacy among different population segments.

The survey also stated that despite the high accessibility of the formal financial sector, financial services are underutilised by the public, as highlighted by the National Financial Inclusion Survey (FIS) in 2018.

In 2018 the FIS revealed that bank account ownership in Sri Lanka is around 88 per cent of the total population.

This rate is higher than the South Asian average of 68 per cent, supported by a high level of bank branch penetration. Further, the FIS noted that 48 per cent of borrowers relied on semi-formal and informal financial service providers for their financial needs. Although, Sri Lanka has made impressive strides in digital payment infrastructure, there is room for increasing the usage, the survey noted.

The survey also revealed the respondents' attitudes towards digital payment methods. More than half of the Sri Lankans have positive attitudes towards the safety and efficiency of digital payment methods